Soft economy hits Viacom ad growth

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The sluggish U.S. economy might be a bigger drag on Viacom than previously thought.

Shares of the entertainment company fell sharply Wednesday after CEO Philippe Dauman signaled second-quarter U.S. advertising revenue growth at the firm's cable networks would come in at only half the company's guidance from the beginning of the month.

At the Sanford C. Bernstein & Co. 24th annual strategic decisions conference in New York, Dauman also downplayed suggestions that the Paramount film studio might not be core to Viacom. He also said his firm will look at a possible future acquisition of the Scripps cable networks that he suggested could come up for sale, although he expects no major acquisitions in the "foreseeable future."

Investors reacted to the latest ad guidance, pushing down the company's Class A stock 4.3% to $36.73 after dragging it as low as $36.02, close to its year low of $36.

When Viacom reported first-quarter results May 2, management predicted 7% year-over-year gains in U.S. cable network ad revenue. But Dauman said Wednesday that U.S. ad revenue should be up 3%-4% over the year-ago period, comparable to gains recorded last year.

Dauman cited "some signs of softness in some categories" like automotive. (partialdiff)